I find it interesting that many people seem to have an assumption that a senior executive who has shown a measure of success for some time will continue to do so ad infinitum.

This belief in an executive’s ability to sustain a never ending “onwards and upwards” is totally unrealistic.

In my own industry of IT, many CEOs who were successful and seen as shining lights during the reign of the mainframes, did not survive the transition to distributed computing. One only needs to witness the demise of industry heavies such as Burroughs, Univac, NCR, Control Data and Honeywell.

Similarly companies like DEC, Data General and Sun Microsystem did not survive later generational shifts despite their CEOs Ken Olsen, Edson de Castro and Scott McNealy respectively all having been seen as visionaries and great leaders in their time. Nevertheless, they were not able to cope with and survive the external changes that bore down on them.

By User:Arj; CC BY-SA 3.0 license; via Wikimedia License

Few would have predicted their demise, but they managed to take their companies into oblivion.
There are hundreds of examples to choose from, but I have taken these three as they are companies where I actually worked.

So what went wrong ?

I accept that CEOs have to be full of confidence, but the first problem was their own over-riding arrogance. I believe that many CEOs just become victims of a belief in their own marketing, as they start to believe in their own “wondrousness” and therefore infallibility. Being included in the initial 62 companies (later culled to 43), named in the Tom Peters book “In Search of Excellence” for DEC and Data General only helped to support this belief. As it was first published in 1982, the year Sun Microsystems was founded, they were too new to be included. Interestingly other industry failures like NCR, Wang and Amdahl were also included on the list.

Ken Olsen of DEC refused to believe that people would ever want a computer on their desk or in their home, let alone in their briefcase or in their pocket, despite the obvious explosion of PC companies and Microsoft. He also resisted the whole idea of “professional salesmen”, never allowing commission to be paid, and believing that he could replace salesmen simply by mailing out a copy of the PDP-8 and PDP-11 handbooks to all IT and lab managers around the world, being beliefs I heard him enunciate regularly during my time there in the 1970/80s. No-one was ever able to dissuade him from these beliefs even as the company began to founder (I have always found the double meaning of the word “founder” to be so apt). DEC was being so successful in the 1970/80s that complacency and self-belief took over from innovation and paranoia, both needed for success.

Scott McNealy, founder, Chairman and CEO at Sun Microsystems, originally seen as a world changer, grew Sun to a point where he came to fully believe in his own infallibility, and in doing so drove out many of his senior executive team such as Eric Schmidt and Carol Bartz who went elsewhere. Maybe even more importantly, despite the efforts of Bill Joy, a Sun co-founder, McNealy on three different occasions personally scuppered a mooted merger with Apple, dubbing the Apple iPod as being no different to an answering machine, being something that would only survive a few years.

Author: Georgemcarvalho; via Wikimedia Commons

Secondly, many CEOs do not see strategic threats coming, until it is too late.

There is so much pressure on CEOs to meet and exceed market expectations that most of their time becomes focussed on meeting operating goals, leaving little time free to keep a studied eye on assessing possible external threats. For example, the signs have been there for more than a decade that India and China not only had the population size, but also the determination and intellectual capital to force themselves onto the world business stage, but many CEOs chose to disregard this. Those that did, most times, could not look beyond the size of these populations as a potential market for their own products. Over the last 5 years I kept hearing the phrase “If I could just get 1% of the Chinese populace to buy my (insert whichever product you wish), I could grow my business by (insert whichever % you wish)”. Those that looked closer would have quickly realised that both China and India have long seen themselves more as suppliers rather than as consumers for international markets, and therefore posed more of a threat than an opportunity.

Finally, companies can become so market dominant that they defocus on innovation.

In my own career, 40 years earlier, International Harvester, the world’s largest and most successful manufacturer of trucks, farm and construction equipment (where I spent 8 years of my early working life in the 1960/70s) did not see, nor believe in, the onslaught that would come from Japanese competitors that ultimately dominated their global market and sent International Harvester to the scrap heap in the sky. A crippling 6 month strike in 1979 which cost the company about $600 million in revenues (over $2 Billion in today’s currency) didn’t help either. The company had stopped innovating and had focussed more on internal cost cutting (which initiated the strike), believing that their “tried and true” products would continue to excite their customers. They didn’t, and customers moved to the Japanese products which were less expensive as well as being “sexier”.

I believe that the problem is that Founders and/or CEOs tend to hang on to their corner suite for too long, and that very few know when it is time to step aside. Rather than moving on when they are at their peak performance, many CEOs stay until they are pushed out by a Board of Directors that has tended to be a bit too forgiving, particularly of a Founder/CEO.

I have a firm belief that senior executives, including CEOs, should not be allowed to stay in the same role for more than about 5 years, as after that time I see that they start to recycle their thinking and tend to run out of steam (see “How do you know when you should step aside” posted April 2, 2012). Intel, as one shining example, rotates its executive team including the CEO regularly and despite generational shifts continues to be a market leader.

As so ably put by Donald Trump, American business magnate, on one of those rare occasions when he didn’t put his foot in his mouth “Success breeds complacency. Complacency breeds failure”.

The first rule of management is that successful management is actually more about how you manage yourself rather than being about how you manage others (see “First rule of management” posted June 25, 2012).

The second rule of management is that the key to your own success is totally dependent on the success of your people (see “Second rule of management” posted September 24, 2012).

The third rule of management is that no man is an island, and you need to build a network in all directions (see “Third rule of management” posted October 1, 2012).

The fourth rule of management is that you do not manage people, but you manage their behaviour.

This means that the values and culture (sum of the behaviours) that you create as a leader is significantly more important than any controls, policies and procedures or rules that you put in place for your team, whatever its size.

Managing behaviour is a moment by moment, hour by hour, day by day activity for a manager and not something that can be done occasionally, which is why formal performance reviews do not work, even if they are scheduled more often than just as an annual event.

Firstly you need to build a framework for the needed behaviour patterns to flourish by establishing a strong set of ethics based on a sense of integrity in the team, being “what we believe is what we say is what we do”. This is critical, as some managers seem to have a belief that “if I say it, so it shall be”, without understanding that their staff will mainly disregard their words but will watch their actions, and will ultimately copy their behaviour patterns, no matter what rhetoric they sprout, no matter how often they sprout it, and no matter what they write in their mission and vision statements.

You can continue to write and say “our customer is number 1” an infinite amount of times but, if you do not actively and personally live your management business life with this belief at the core of all your actions, no one will believe you and they will all tend to act the same way that you do.

One CEO I worked for never stopped talking about the importance of the customer, but went out of his way to avoid customer contact, and spent much of his time complaining to his executive team about how ungrateful the customers were about the “pearls” that we provided for them. As a result, the pervasive attitude in the company towards its customers was one of arrogance and general disdain. When I had the need one time to bring a customer issue to the attention of the VP Engineering, his response was that the problems the customer was facing with our products was due to the fact that they kept hiring “stupid people”, and that I should tell them that if they had smarter people in their team the problems would go away.

“Actions do speak louder than words …”, and as so ably added by Mark Twain “… but unfortunately not as often.”

Secondly, you need to understand that every interaction you have with a member of your team is an opportunity to reinforce desired behaviour, remembering that positive reinforcement is a significantly more effective way to manage behaviour than telling someone where they went wrong (see “Teaching old dogs new tricks” posted June 20, 2010). The goal is to catch people doing something right, and to tell them that this is the case, that it pleases you and that it benefits the team and the company. This not only reinforces the behaviour that you want to see repeated, but also establishes the fact that you care about your people and are aware of what they are doing.

Author: Glen Bowman; via Wikimedia Commons, CC BY 2.0 license

As said by Keith Henson, American Space engineer and evolutionary psychologist “People repeat behaviour that leads to flooding their brains with pleasurable chemicals. The short-term reward loop acts over hours to years …”.

You also need to ensure that you dedicate a significant amount of time to spend managing the behaviour of people in your team who are struggling in their allocated role. Too many managers leave “strugglers” alone till the end of the year formal performance review, which for some subordinates will be the first time that they will learn that their performance during the previous year was not at an acceptable level. I believe strongly that if you have hired people for their strengths, you cannot fire them for their weaknesses if you, as their direct supervisor, have not made significant efforts to help them redress these (see “Move them up or move them out” posted August 23, 2010). The sooner you address performance issues the sooner you have a chance to correct them, and the sooner you are able to make a considered judgement on whether the underperformer will ever be able to meet the standards of required behaviour, and hence the performance needed, to be successful.

Annual performance reviews are at best only an analysis of historical activities and as such have little influence on effectively managing behaviour, which is best handled when it is first exhibited and noted, and not left to fester till many months later. Behaviour that is unacceptable, if left alone for too long, can become so ingrained in a person and/or a team that it becomes seen as being acceptable and becomes part of standard behaviour and hence much harder to change or eradicate.

The way that you and your people behave both internally to other departments and externally to your wider ecosystem is what defines you as a manager and leader, in the same way that your behaviour in the community defines you as a neighbour, a friend and ultimately a human being.

“When man learns to understand and control his own behaviour as well as he is learning to understand and control the behaviour of crop plants and domestic animals, he may be justified in believing that he has become civilized.” American author Ayn Rand (1905-1982)

“As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.”
Albert Einstein

via Wikimedia Commons

I have realized over my 40 year career that in most business situations you should never have an idealist or a perfectionist in charge of a critical project.

During the early days of my tenure as a Global head of HR, towards the end of my corporate career, I put together a team to develop a much needed dual career path structure for our software development organisation that would ensure that we did not needlessly push brilliant people into management positions, when they really wanted to remain as individual contributors but with greater recognition, influence, prestige and compensation. The head of one of my HR departments volunteered to head up the team and accepted a deadline of 6 weeks for completion.

We had regular weekly review meetings of his department’s general activities, and the dual career path project as a part of these, and the updates suggested that all was tracking to plan right up until the 5th week into the project when he asked me for a 2 week extension. This sounded the first warning bells, but as I had believed that the original time scale was tight anyway I accepted his reasoning and acquiesced.

Author: Alphamu57; GNU FD license; via Wikimedia Commons

The following week, having now become a trifle nervous, I decided to delve into the project more deeply, and was staggered to find that the team, under his direction and encouragement, had greatly extended the scope of the project to cover a full job grading and classification system, across every division of the entire company of over 35,000 people, across more than 70 countries. Their plan had been to present to me, at the end of the project timeline, not a solution to the pressing problem of a dual career path offering for our software development organisation, but a grandiose project plan covering 12 months, and a horde of contributors, to this now vastly expanded project scope. A veritable “thing of beauty”, but not delivering a solution to a desperate need of the business.

I had made some basic but critical management errors.

Firstly, I had not been bloody-minded enough in ensuring that my project manager had understood, accepted and committed in blood that the project was for a dual career path only, even though this fact was clearly stated in the project plan. Also, rather than relying totally on trust, I should have dug more deeply into the actual project activities during our weekly review meetings.

Secondly, and most sadly, I had believed that one of my HR people could head a team to solve a real business problem. This would come with time, but I had inherited an HR organisation that did not yet understand that there are no such things as HR problems, only business problems that HR need to help to solve.

Thirdly, and most critically, I had used someone to lead the project who believed that, given enough resources, time and money not only could he solve the one critical issue that he had been tasked with, but he could solve all human woes, including world hunger, at the same time.

I had allowed an idealist to take charge, rather than a pragmatist.

I removed him from the team lead role, replaced him with one of the other team members who actually worked in the software development organisation, and who had a personal interest in the outcome, and had a workable solution in 3 more weeks.

It was not perfect in every way, and it took a few iterations, adjustments and some tweaking over the years, but it quickly solved a serious problem facing the business, and had an immediate impact on the career choices for some of our brightest and most valuable employees.

I have found that, apart from some obvious areas of finance, there are no perfect solutions in the business world. There are only good solutions and better ones. No business strategy is ever 100% perfect and the skill needed from management is to know when to stop talking and planning, and when to start execution, with the understanding that some “do it, try it, fix it” will ultimately bring greater results than trying to reach perfection before actually making a start.

Generally, a 70-80% solution to a business problem that has been thought through by smart, capable and experienced people within a reasonable time scale, and which is well executed, will have significantly more chance of success than tying up a team for an excessive amount of time in the hope that they can get close to a 100% solution.

I am not suggesting that critical strategic decisions should be taken haphazardly and without allocating the right people and enough time to do them justice, but I have found, over and over again, that the more time you allocate to a project, the more time it will take, and that the quality of the solution will not increase proportionately to the amount of extra time that is allocated, as was so well postulated by Cyril Northcote Parkinson in 1955 in an essay in the Economist.

A strategy that is well enough thought through to be a good fit with the team’s needs, its capabilities, values and culture, that is well communicated and with excellent execution is what is needed for success, and in today’s fast moving and ever changing business landscapes, no-one has the luxury of excessive time for over-deliberation and discussion.

As so well put by Jack Welch “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.”

The dictionary defines an entrepreneur as “A person who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.

It then defines an intrepreneur as “”A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”.

But it’s not that simple.

Firstly, I do not believe that all entrepreneurs are necessarily “assertive risk takers” as the dictionary definition suggests. I accept that some are, and they will risk everything on the throw of a single die, but I believe that these are actually in the minority. Most entrepreneurs I have met are really quite risk averse, in that they will only take the risks that are necessary to create and maintain their business, but only to an acceptable level, and they will also understand when to call it quits. Some of the highly successful business people of our time such as Bill Gates and Steve Jobs actually risked little in starting Microsoft and Apple respectively, both starting with minimal personal investment and both creating their companies initially with some existing external and family support.

Author: Matthew Yohe; CC BY 3.0 license; via Wikimedia Commons

I do accept that successful entrepreneurs do generally earn the right to the mantle of innovation, whether it is through new and/or different products, services or creative go-to-market strategies such as an early Avon or the more recent e-commerce companies such as eBay and Amazon, and that this badge of innovation also holds true for intrepreneurs.

Author: Szk7788; CC BY-SA 3.0 license; via Wikimedia Commons

However, having lived in both camps, I feel that there are greater differences between en- and intrepreneurs than just whether they choose to conduct their activities within or without the surrounds of a large corporation.

In the mid 1980s I had an opportunity to buy into a small, fledgling software company which had a great early 4GL (4th Generation Language) with a serious market opportunity, but without a real go-to-market strategy or capability. The two founders were both US-residents, from an accounting background, and wanted a third partner to help build the global presence as well as to directly set up the Asia Pacific business. I had always wondered about whether I actually had any serious entrepreneurial bent, as in my previous roles in large global companies, I had been regularly described as business innovative and as being prepared to take calculated risks, and this seemed a reasonable opportunity to find out whether these descriptions had any truth, and at an investment level I could handle, though with some stretch.

Despite our success, (we grew from a standing start to USD $8M in 4 years), I didn’t really enjoy it, as I realised fairly quickly that I wasn’t a small company person and that financial success alone was not enough to compensate for all the elements of a working lifestyle that I loved, and needed, from a large company environment, and I started to understand that I was probably more of an intrepreneur than an entrepreneur.

The first thing that I realised is that I preferred the ability to focus on just one role at a time, which a large company enables one to do, rather than needing to be a jack-of-all-trades as is needed in a start-up. I found it more satisfying to be just a Programmer or a CIO or a Salesman or in a specific management role rather than having to fill all these roles at once. In my own small business I had to not only worry about running the business with its inherent early funding issues, but also be involved in the software code, in customer support queries, in demo systems, in sales and presales, as well as having to come in with my wife one weekend to give the office a new coat of paint.

The second issue for me was that I missed the energy that successful large companies exude. A small company can be fast moving and exciting but it just does not have the explosion of energy and momentum that a large company can generate, in the same way that that the QE II liner under full steam compares to a small dinghy. I have friends who love nothing more than controlling their own small yacht, but I would rather spend my leisure time on a luxury ocean liner in a well-appointed cabin any time.

The third challenge was that I had been fortunate in my large company working life that in general when I had been given a role to perform I had then then been left alone to do it. My bosses would have monthly management and reporting meetings, annual strategy sessions and would occasionally talk to me on a needs-only basis. In sharp contrast, I found it hard to cope with “the family” nature of a small company, my own small team seeming to have a need to interact continuously on nearly every issue. My two American partners also seemed to find some excuse to “chat” to me every day, which to my surprise and ultimate frustration, didn’t diminish with our growing success and financial stability, and I found this all somewhat invasive, as I have always believed that a lucky person has a large family but all living in another city. My illness in 1989 gave me the opportunity and excuse to divest myself of this small company co-owner holding back to my partners and, after my health returned, the opportunity to go back into a large company role.

However, what I missed most by being in a small company was the interaction with my peers and those around me who would stimulate, challenge and even oppose me, and I believe that this is one of the key differentiators between en- and in-individuals. True entrepreneurs are self-sufficient and tend to measure themselves mainly on personal success, whereas I have tended to measure my career success mostly by how many successful managers and leaders I have helped to build.

True entrepreneurs can go it alone, which is something I readily choose not to do, so I am obviously not one myself. I have always needed to be able to mix with smart, energetic, capable, enthusiastic, slightly cynical, optimistic, success-driven, non-political, life- loving, eccentric and ambitious peers in large numbers in day to day, equal to equal relationships. This is one of the reasons why in my retirement now I choose to be involved mainly in non-exec board roles so that I can keep satisfying this need of not doing it on my own.

Bill Rancic, winner of Donald Trump’s “The Apprentice” had it right when he said “If it really was a no-brainer to make it on your own in business there’d be millions of no-brained, hare-brained, and otherwise dubiously brained individuals quitting their day jobs and hanging out their own shingles.”

The first rule of management is that successful management is actually more about how you manage yourself rather than being about how you manage others (see “First rule of management” posted June 25, 2012).

The second rule of management is that the key to your own success is totally dependent on the success of your people (see “Second rule of management” posted September 24, 2012).

The third rule of management is that no man is an island. To borrow from Scott McNealy one of the founders of Sun Microsystems who said “the network is the computer”, the network is the successful manager.

These network linkages are critical to success and are not just to support the adage that “It’s not what you know, but who you know that is important”. In today’s business world every manager has to foster these linkages to every part of his ecosystem to support and enable the success of his area of responsibility.

When I moved to a multi-country regional role, I backfilled my own country management position with a successful national Sales Director. A large part of his success had been based on his close connection to his sales and pre-sales teams, and to me it seemed to be a reasonable assumption that as his responsibilities increased so would his understanding that his connections would have to expand outside of this sole focus. Not being one to leave anything to chance, I initiated a long discussion with him about the responsibilities that a CEO carried for his entire ecosystem. Despite nodding wisely, and his assurances that he understood all this and that I needn’t worry about his ability to take over from me, he never really managed to do it, and he continued to spend his entire time focussing on his sales people.

Despite some initial success, his business area started to suffer, and after some investigation I found out that he never actually met with our customers unless there was a specific deal in which he was needed to help close. This meant that not only did he not have any understanding of what was happening in our customer base, he also had little understanding of what was happening in the general market place, as large company CEOs are a rich source of market data. It also meant that the C-level executives in our major accounts started to see us as being less of a business partner who was interested in helping them be successful but more as an organisation that was only interested in how much money we could get out of them, and as a result they became less inclined to give us their business. This lack of attention was particularly true with our public sector customers, and when I questioned the MD about this he gave me a long story about how boring public sector people were to do business with. As the public sector represented about 50% of our business this revelation was particularly disturbing.

CEOs of large companies talk to each other and rely a lot on personal anecdotes and referrals from each other, and to be part of this network is critical for the success of any CEO.

“Networking is about cultivating mutually beneficial, give-and-take, win-win relationships. The end result should be to develop a large and diverse group of people who will gladly and continually refer a lot of business to us, while we do the same for them. All things being equal, people will do business with, and refer business to, those people they know, like and trust.”

The situation on non-attention was no different in our ecosystem of business partners who had previously been very loyal to our company and had invested considerable amounts of money and resources in building consulting practices that supported our ability to take our products to market. As our country MD had shown little interest in their businesses, and we were now not close enough to sense and at least try to influence their business activities, their senior management teams had taken the decision to expand their practices to include competitive products. Whilst this expansionary move was ultimately unstoppable, a closer relationship to their senior executives could have held these moves at bay for at least a few more years, as we were managing to do in other countries.

Unfortunately I had no choice but to replace this particular MD.

I believe that no manager can succeed without fostering and growing all these external network connections covering customers and business partners, but also suppliers, distributers and service providers. For example, fostering strong relationships with the Headhunter/Search firms who specialise in your industry can result in your being at the top of the contact list when an outstanding candidate surfaces.

A smart manager will ensure that s/he has strong links to every part of the organisation, and particularly with those departments that can have an impact on the speed and dexterity, and hence the success, of their own team, no matter the size. Strong relationships will result in your people being given priority over others when speed is essential, for example when needing support from the legal department in a contract negotiation or from HR when needing to expedite a geographic relocation.

It is also critical that you remember to include in your network all the admin, clerical and support people who can be an integral key to your success. PAs can make it as easy or as hard as they feel inclined to in granting you access to their execs, just as the people on reception can influence your visitors’ views of your company and of you. Treat all of them with the respect that all professionals deserve and warrant.

“Your power is almost directly proportional to the thickness of your Rolodex, and the time you spend maintaining it. Put bluntly the most potent people I’ve known have been the best networkers — they know everybody from everywhere and have just been out to lunch with most of them.”